This graph represents the problem with the economy, it also illustrates why a credit bust is such a devilish thing to deal with.And why attempts by the government to get the housing ATM working again will fail.

People are now trying to reduce their indebtedness.

It also represents how much demand has been pulled from future production into the past. That is it indicates how much production is no longer required.

What is amazing is how much the UK has not been affected by the downturn. In the US property is bust and people have stopped buying, but in the UK the housing market is still going and the bars and restaurants are humming. Why?

By '97 we were just out of the bump-along the bottom of the early nineties recession, which is the flat 89-97.

I expect that soon after the BoE were told to manipulate interest rates to an artificially low target (CP! 2%), artificially low because it excluded housing (an 'independent' BofE told to do the wrong thing by government!).

That meant cheap credit and too much of it, a housing bubble and too much use of 'leverage' all over the place - in other words, a UKBubble.

London may not seem different if the subtle changes happen gradually. Having spent a couple of hours on Oxford St - I really felt that the conversion of the old Virgin Megastore into an arcade flea market characterised a change in progress.

The other thought to bear in mind is that the debt to GDP ratio kept rising in the early 1930's. Not because of debt rising - it wasn't! The problem was a falling GDP and rising unemployment.